A Michigan appeals court expanded no-fault insurers' ability to recover PIP benefits from negligent third parties, overturning a three-decade-old precedent.
The decision, published on April 20, 2026, came from a seven-judge special panel of the Michigan Court of Appeals (Docket No. 366229). The panel unanimously overruled the 1993 decision in Citizens Ins Co v Pezzani, which had held that no-fault insurers were barred from pursuing subrogation claims against tortfeasors who were not motorists. For insurers writing no-fault auto coverage in Michigan, the implications are immediate and practical.
The case began with a routine trip to the mechanic. Deborah Dale took her 2012 RAV4 to Family Tire Service of Manistee for a tire rotation and other services. About a mile after leaving the shop, the left rear tire came off her vehicle and struck a car driven by James Call. His wife, Sharon, was a passenger. The impact sent their vehicle airborne, and both were injured.
The Calls filed for personal injury protection benefits through their no-fault insurer, Frankenmuth Insurance Company, which paid out $381,760.17. The Calls also sued Family Tire for negligence, and Frankenmuth moved to intervene in the suit as the Calls' subrogee, seeking to recover what it had paid.
Family Tire pushed back. It argued that under Michigan's no-fault act – specifically MCL 500.3116(2) – an insurer could only pursue subrogation in three narrow scenarios: if the accident happened outside Michigan, if it involved an uninsured vehicle, or if it involved an intentional tort. None of those applied here. Family Tire leaned on Pezzani, which had held since 1993 that insurers were barred from recovering against nonmotorist tortfeasors outside those three exceptions.
The trial court agreed with Family Tire and granted summary disposition, effectively ending Frankenmuth's claim.
On appeal, a panel of the Michigan Court of Appeals opined that MCL 500.3116(2) applies only when an insurer seeks to recoup PIP benefits from its insured after the insured recovers on a tort claim. However, the panel felt bound by Pezzani and affirmed the trial court. It then called for the convening of a special panel to revisit whether Pezzani should remain binding authority.
The seven-judge special panel that convened to answer that question concluded it should not.
The panel walked through the text of MCL 500.3116 and found that, read as a whole, the statute governs one specific relationship: the insurer's right to recoup benefits from a claimant – typically, its own insured – after the claimant recovers on a tort claim. It does not address an insurer's independent right to sue a negligent third party as a subrogee.
The statute's language reinforced this reading. Subsection (2) repeatedly refers to the recovery realized by the claimant and requires the claimant to repay insurers out of that recovery. It grants the insurer a lien on the claimant's recovery. A companion provision, MCL 500.3146, sets a one-year deadline for an insurer to enforce its rights, measured from the date payment has been received by a claimant upon a tort claim. All of it points in the same direction: the statute regulates what happens between an insurer and its claimant, not what happens between an insurer and a third-party tortfeasor.
The court noted that Pezzani, while correctly stating the legal principles, had misapplied them. The 1993 decision did not analyze the statutory language or explain why its result was consistent with the text. For over three decades, that reasoning had blocked an avenue of recovery for Michigan's no-fault insurers.
With Pezzani overruled, the panel reversed the trial court and remanded the case for further proceedings. Frankenmuth can now pursue its negligence claim against Family Tire.
The practical takeaway for Michigan no-fault insurers is straightforward. When a nonmotorist third party – a tire service shop, a product manufacturer, or another negligent party – causes a motor vehicle accident, insurers are no longer barred from stepping into their insured's shoes to recover PIP benefits paid. The three exceptions in MCL 500.3116(2) still apply when an insurer seeks reimbursement from its own claimant, but they do not limit an insurer's ability to bring a tort claim directly against a negligent nonmotorist.
